The Perils of Seal Renting and Permission Slips

I was once contacted by a marketing official of renewable energy firm looking for help with a small solar array project. His company had a solar installation designed offshore but needed an engineer licensed in the proper jurisdiction to seal the drawings…that afternoon. I balked at the request. I could not possibly perform a sufficient review of the design to represent to the jurisdiction that I was in responsible charge. The marketer insisted that my seal on the plans would just tell the jurisdiction that I would be involved going forward. Sure I would be…

Whether the marketer understood it or not, he was asking me to “rent” my seal to an unlicensed party so that their project could clear a hurdle requiring a professional engineer to be in responsible charge without having to incur the cost of professional services. In these cases, if any engineering is performed at all, it is performed by persons whose qualifications have not been vetted by the jurisdiction in which the project is located. The designer may, therefore, be a contractor without engineering experience beyond a bachelor’s degree or a foreign engineer with limited experience with US codes and standards. Or the designer may be a client who has no engineering education or experience at all.

While there are circumstances in which a licensed engineer will take responsible charge for engineering performed by a client, it requires a thorough review of the client’s work and the engineer must have authority to cause any necessary changes to be made. This does not occur with seal renting. Instead, like the solar project that I was asked to seal, the engineer simply seals documents for a fee without providing any engineering services. Seal renting is unethical because it misrepresents to building officials, contractors and other stakeholders that the engineer has exercised professional responsibility and care when this has not occurred or was not performed under the supervision of a licensed engineer. In addition, the practice can be illegal because it often violates the definition of “responsible charge” defined by state licensing laws. However, it is relatively uncommon for engineers to be disciplined for seal renting because it is hard to prove that an engineer rented his or her seal as opposed to having reviewed and sealed a client’s engineering documents because they were adequate. Thus, seal renting represents a sort of black market.

There is another questionable practice, which, like seal renting, involves a professional engineer providing sealed documents without the client paying the full cost of responsible professional services. However, unlike seal renting, this practice involves the engineers themselves preparing overly general or vague drawings, calculations or other documents. These instruments of service are too incomplete to be used by a contractor to build something. They may be entirely conceptual, with no project-specific or site-specific design. Drawings and calculations of this nature are often prepared for a contractor or a supplier. Since they give those firms an engineer-sealed, proforma document with few specific requirements, the contractor or supplier can almost improvise their work and still nominally comply with the engineer’s “design”. Given how much latitude these instruments provide the client who commissioned them, I call these types of documents “permission slips”.

Seal renting and permission slips result in an artifact implying that the content of a drawing, specification, report or calculation was arrived at through responsible professional engineering practice when it was not. Both practices take advantage of the deference provided to instruments bearing an engineer’s seal. Building officials, who are tasked with enforcing building codes, are not always design professionals themselves and do not have the qualifications or license to contest a licensed design professional’s instruments of service. They may, therefore, limit the scope of their review to administrative provisions related to the permits being sought. Engineers and other design professionals will often be reluctant to comment on another professional’s instruments of service, both out of professional courtesy and for fear that they will somehow become liable for the original engineer’s work (this is largely unfounded). In addition, there is often asymmetric information between the specifying/reviewing professional, who may be a generalist in their field, and the engineer preparing a submittal document who may be a specialist and have access to proprietary information and design tools.

Most of the permission slips and suspected rented seals that I have encountered have been on construction submittals by contractors and suppliers. For a minimal fee, a contractor or supplier can obtain a sealed document to provide cover for them to execute some aspect of the work. However, there may be considerable risk exposure between the contractor’s obligation to perform the contract and their engineer’s obligation to provide non-negligent service. When the engineer has been knowingly engaged by a contractor or supplier, strictly to seal a document (ostensibly after a cursory review) or to provide essentially a conceptual design, this risk may be much greater. Unlike consumers, firms operating in the construction industry ought to have the experience to understand the implications of agreeing to a severely limited scope and deserve to be exposed to the consequences of their choices.

While constructors may be more likely users of a rented seal or a permission slip, I have often heard owners, lawyers and in fact other design professional express the idea that another party’s engineer’s seal afforded them some protection in the case of a failure.  The factors underlying the deference paid to sealed instruments seems to have produced the conventional wisdom that a design professional’s seal is sort of guarantee to all manner of third parties. This sense of security seems to come from the idea that the seal provides someone to “blame” if things go awry. In many instances, stakeholders require a sealed document so as to identify a responsible party if things go wrong, but otherwise, do not care about the content of the instrument or the quality of the underlying professional services.

However, this attitude is misplaced. Having an engineer’s seal on a document is not the be all and end all of managing the risk associated with an engineered system. In the best of circumstances, it does not guaranty that all stakeholder risks have been addressed. It does not ensure compliance with a construction contract; it does not mean that best practices were implemented. It also assumes a level of infallibility and omnipotence of the responsible engineer that is just not reasonable.

In addition, the notion that an engineer’s seal on an instrument protects all other parties from all risk is wrong. Engineers are not strictly and absolutely liable for their services. In the event of a failure, a harmed party must show that the engineer was negligent, that the negligence was the proximate cause of the harm done and that the engineer owed a duty of care to that party. Just because a document was sealed by an engineer does not mean that anyone can recover against the engineer for any reason if something goes wrong. There is always some retained risk for all project stakeholders. But even assuming that one can legally recover damages from an engineer, what are the chances that an engineer willing to seal instruments that they have had no part of producing, or that are so incomplete that their contractor client can improvise the work however they please, is responsible enough to carry adequate professional liability insurance?

Finally, since the whole point of these practices is to prepare documents at the lowest possible cost, it is somewhat likely that the instruments and/or underlying engineering are inadequately detailed, are incomplete, contain errors and omissions or are otherwise of poor quality. Incorporating poorly designed elements and systems into a project increases the chances of performance failures, delays and claims. Even temporary systems, when poorly designed, can have serious impacts on project success by causing damage to adjacent facilities, introducing defects into the finished work and delaying construction.

The risk associated with sealing renting and permissions slips can be effectively mitigated by a complete and thoughtful specification and submittal review process. The owner and design team should understand what they need, specify it and hold the contractors and suppliers to the specification. This may require the firms on the design team to make use of in-house subject-matter or experts or specialty consultants. Delegated design items and other engineered submittals should be properly reviewed. Any temporary systems significantly affecting permanent work or affecting third parties, such as underpinning and shoring, should be governed by thoughtfully developed performance specifications and the shop drawings and calculations, as applicable, should be reviewed for conformance with the performance specifications. When submittals are not thoroughly reviewed, opportunities are missed to confirm assumptions, coordinate different facets of the project and verify that design intent has been communicated throughout the process. Addressing these issues when the design is just on paper is much less costly than discovering problems after construction.

Seal renting and permission slips are commoditization of professional engineering services taken to its logical extreme: price competition going so far that the professional services themselves are mostly, if not entirely omitted. These practices are made possible by blind deference to an engineer’s seal and incentivized by a portion of the market preferring cheap to good and marginalizing expertise. They are not without avoidable cost and risk to all project stakeholders. It is up to the A/E/C industry to better understand the risk and be less tolerant of these bad practices.

The information and statements in this document are for information purposes only and do not comprise the professional advice of the author or create a professional relationship between reader and author.

See also: Peer Reviews, Risk Management